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Community Health Systems, Inc. Previews Third Quarter 2015 Operating Results

FRANKLIN, Tenn.--(BUSINESS WIRE)--Community Health Systems, Inc. (NYSE: CYH) (the “Company”) today announced preliminary financial and operating results for the three months ended September 30, 2015. These results are based on information available to management as of the date of this press release and are subject to revision upon finalization of the Company’s quarterly accounting and financial reporting procedures.

The Company anticipates net operating revenues for the three months ended September 30, 2015, will be approximately $4.846 billion, compared with $4.780 billion for the same period in 2014. Income from continuing operations before taxes as reported for the three months ended September 30, 2015, is expected to be approximately $121 million, compared with $133 million for the three months ended September 30, 2014. Adjusted EBITDA for the three months ended September 30, 2015, is expected to be approximately $661 million, compared with $750 million for the same period in 2014. Income from continuing operations for the three months ended September 30, 2015, excluding expenses from the planned spin-off of Quorum Health Corporation, is expected to be $0.56 per share (diluted), compared with $1.01 per share (diluted) for the three months ended September 30, 2014.

The consolidated operating results for the three months ended September 30, 2015, reflect a 1.9 percent decrease in total admissions and a 0.2 percent increase in adjusted admissions, compared with the same period in 2014. On a same-store basis, admissions decreased 2.1 percent while adjusted admissions increased 0.1 percent, compared with the same period in 2014. Same-store net revenue per adjusted admission increased 1.0 percent for the three months ended September 30, 2015, compared to the same period in 2014.

Consolidated net operating revenues increased over the prior year by 1.4 percent as a weakness in volume and deterioration in revenue payor mix compared with the first six months of 2015 resulted in lower than anticipated net operating revenues during the period. Accordingly, consolidated salaries and benefits, which included higher costs related to an increase in the number of employed physicians, increased as a percentage of consolidated net revenue from 45.7 percent for the three months ended September 30, 2014, to 46.2 percent for the three months ended September 30, 2015. Consolidated supplies expense, which increased primarily from higher drug costs, also increased as a percentage of consolidated net revenue from 15.3 percent for the three months ended September 30, 2014, to 15.7 percent for the three months ended September 30, 2015. Consolidated other operating expenses, which included higher costs incurred related to the Company’s implementation of ICD-10, increased as a percentage of consolidated net revenue from 23.4 percent for the three months ended September 30, 2014, to 23.7 percent for the three months ended September 30, 2015. Electronic health records incentives were also lower than the same period in the prior year by $34 million.

The Company has posted on the “Investor Relations” section of its website a slide presentation regarding the preliminary results of operations for the third quarter ended September 30, 2015. The Company anticipates reporting its complete financial results for the three and nine months ended September 30, 2015, on November 2, 2015, followed by a live earnings call on November 3, 2015.

EBITDA is a non-GAAP financial measure which consists of net income attributable to Community Health Systems, Inc. before interest, income taxes, and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted to exclude discontinued operations, loss from early extinguishment of debt, impairment of long-lived assets, net income attributable to noncontrolling interests, acquisition and integration expenses from the acquisition of Health Management Associates, Inc. (“HMA”), expenses incurred related to the Company’s planned spin-off of Quorum Health Corporation, expense related to government legal settlements and related costs, and expense from fair value adjustments related to the HMA legal proceedings, accounted for at fair value, underlying the CVR agreement, and related legal expenses. The Company believes that it is useful to present Adjusted EBITDA because it excludes the portion of EBITDA attributable to noncontrolling interests and clarifies for investors the Company’s portion of EBITDA generated by continuing operations. The Company...


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